IN BRIEF
WASHINGTON
New-home sales in U.S. sink
to unexpected low in January
Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.
The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who were expecting a 5 percent increase over December.
January's weakness was evident in all regions except the Midwest, where sales posted a 2.1 percent increase. Sales were down 35 percent in the Northeast, 12 percent in the West and almost 10 percent in the South.
The drop in sales pushed the median sales price down to $203,500. That was down 5.6 percent from December's median sales price of $215,600, and off 2.4 percent from year-ago prices.
WASHINGTON
Bernanke says record-low interest rates still needed
Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that record-low interest rates are still needed to ensure that the economic recovery will last and to help ease the sting of high unemployment.
In his twice-a-year report to the House Financial Services Committee, Bernanke struck a confident tone that the recovery should endure. But he also sought to reduce expectations.
The moderate economic growth the Fed expects will lead to only a slow decline in the nation's nearly double-digit unemployment rate, he said. He offered no new clues about the timing of an interest rate increase. Most economists think it is months away. Bernanke said rates will need to stay at exceptionally low levels for an extended period "as the expansion matures."
NEW YORK
Planned sale of Hummer off; brand now faces shutdown
Hummer, the off-road vehicle that once symbolized America's love for hulking sport utility vehicles, faces a shutdown after its sale to a Chinese heavy equipment maker collapsed.
Sichuan Tengzhong Heavy Industrial Machines Co. said Wednesday it pulled out of the deal to buy the company from General Motors Co. Tengzhong failed to get clearance from Chinese regulators within the proposed time for the sale, the Chinese manufacturer said.
GM said it will continue to honor existing Hummer warranties.
GM has been trying to sell the loss-making brand for the past year and signed a deal with Tengzhong in October. However, resistance from Chinese regulators, who have been putting the brakes on investment in the fast-growing Chinese auto industry, created difficulties from the start.
WASHINGTON
Freddie Mac loss is almost
$26 billion during 2009
Freddie Mac lost almost $26 billion last year, ominous news for taxpayers who are paying to rescue the mortgage finance company and also Fannie Mae.
Freddie Mac, which has lost almost $80 billion since the housing crisis started in 2007, is bracing for more pain. The McLean, Va.-based company said a record 4 percent of its borrowers are at least three months behind on payments and facing foreclosure.
Its chief executive, Charles Haldeman, warned Wednesday of a "potential large wave of foreclosures" still to come.
This is a major problem for the federal government, which seized control of Freddie and Fannie in September 2008. The two companies have already siphoned $111 billion from the government to stay afloat.
That number is expected to hit $188 billion by fall 2011.
WASHINGTON
American thrifts end two years of losses, post profit in 2009
America's thrifts posted a small profit last year after two years of losses, evidence the industry may be stabilizing amid the economic recovery.
But the industry also saw significant consolidation as several large thrifts were combined with their parent banks. As a result, the amount of new mortgage loans originated by thrifts dropped last year.
The Office of Thrift Supervision said Wednesday that savings and loans earned $29 million in 2009, after reporting net losses of $15.9 billion in 2008 and $649 million in 2007. It is the industry's first annual profit since 2006 .
WASHINGTON
Federal regulators instate
new rule for short selling
Federal regulators on Wednesday imposed new curbs on the practice of short-selling, hoping to prevent spiraling sales sprees in a stock that can stoke market turmoil.
The Securities and Exchange Commission, divided along party lines, voted 3-2 at a public meeting to adopt a new rule. Investors and lawmakers have clamored for the agency to put such brakes on trading they say worsened the market's downturn in the fall of 2008.
The rule puts in a so-called circuit breaker for stock prices, restricting short-selling of a stock that has dropped 10 percent or more for the rest of a trading session and the next one. The new curbs take effect in about 60 days, but stock exchanges have six months after that to implement them.
Short-sellers bet against a stock, in a legal practice widely used on Wall Street. They borrow a company's shares, sell them and then buy them when the stock falls and return them to the lender -- pocketing the difference.
